If you are facing insolvency, there are different ways through which you can get out of it. While Individual Voluntary Agreements (IVAs) are commonly chosen by people, bankruptcy is yet another option. Now, the thing is, you may prefer an IVA over going bankrupt. But, not everyone is eligible to get an IVA. You have to fulfil some conditions. And, in quite a lot of cases, people aren’t eligible or fail to get this kind of arrangement.
Then, what is the way out? There is no other way but bankruptcy. Even though it comes with a negative remark on your reputation, it is a viable way out of debt, if you can’t pay. After bankruptcy, all of your debts, except certain kinds, would be written off. But, it is not so simple, and you have to go through a whole lot of process. So, read to get some knowledge about the detailed facts on undischarged bankrupt.
What is the Meaning of being Undischarged Bankrupt?
When you have filed for or been petitioned for bankruptcy, it is the start of a whole process. This procedure doesn’t end in a few days or even a few weeks. It takes an entire year to complete it.
An undischarged bankrupt is simply someone who hasn’t completed the process of bankruptcy. Now, there are some implications of being an undischarged bankrupt. Certain restrictions are put on someone who is an undischarged bankrupt. At the end of the process, these restrictions are removed and you can go back to your lifestyle.
What are the Restrictions put on an Undischarged Bankrupt?
The restrictions that an undischarged bankrupt face is mainly related to the spendings, borrowings, and possessions. Here are the specifics of the restrictions that you face while being undischarged bankrupt:
Restrictions on Spending
Being undischarged bankrupt means that you’re not officially bankrupt yet. As such, you would have to keep paying some monthly fees to your creditors, until the end of the process.
But, the money you pay would be fixed, based on whether you can afford it. So, you need not worry about the lack of money for your basic needs. But, to make sure you’re able to pay all the instalments, you’ll have to follow a budget. Any savings outside that budget would contribute towards repaying your creditors.
Restrictions on Borrowing
If you need to borrow money while being undischarged bankrupt, you can borrow up to £500. If you borrow any amount more than this, it would be compulsory to inform the lender that you’re bankrupt. In such a scenario, it is unlikely that the lender would agree to lend you the money.
Restrictions on Running a Business
If you own a company, you wouldn’t be allowed to run it, without the court’s permission. Also, you are not allowed to change the name of your business. Additionally, it would be compulsory for you to inform your associates about your bankruptcy.
Restrictions on Travel
You won’t be facing any restrictions on travel if you reside in England or Scotland. But, in case you’re a resident of Northern Ireland, you won’t be allowed to leave the country before the process ends.
Restrictions on Certain Jobs
Being undischarged bankrupt can mean that you’ll be barred from certain kinds of jobs. Also, if you are in a job position related to financial matters, you might lose it. Even if you don’t, you’ll be restricted from performing some of the functions.
Do You Have to Apply to Get Discharged?
You don’t need to apply for getting discharged from bankruptcy. The court will discharge you after the completion of one year. All you have to do is cooperate with them during this period and fulfil all the necessary requirements. Failure to do so might get your discharge delayed.
Do You have to Pay off any Debt after Bankruptcy?
Going for bankruptcy means most of the debts that you have at the time will be written off. But, there are some kinds of debts that you’ll have to clear, even after being discharged. These include criminal fines, fraudulently obtained debts, student loans, etc.
What Happens After Getting Discharged?
After you get discharged, any debt, excluding some types, will be written off. If you have the kind of debts that can’t be written, you have to clear them. Most importantly, the restrictions you faced during the process would be lifted. You would be free to return to your usual life.